Questions arise over stimulus, cuts

JACKSON – Members of Gov. Haley Barbour’s staff were unable Wednesday to tell the Senate Appropriations Committee how much federal stimulus money the governor has at his discretion.
Members of the Appropriations Committee asked the question during a meeting called by Chairman Alan Nunnelee, R-Tupelo, to discuss a House-approved bill that would limit the cuts the governor can make to offset a budget shortfall for the current fiscal year.
Amanda Jones, an attorney for Barbour, and state Fiscal Officer Kevin Upchurch told Senate members that it might violate federal law for federal stimulus funds to be put in the state treasury to offset budget cuts, but they said they did not know for sure.
The House bill calls for the governor to use $50 million from the state rainy day fund and $61 million in federal stimulus funds to offset the $210 million in additional cuts he has said he plans to make.
The governor already has cut many state agencies, including education, by $225 million, or 5 percent, because tax collections are not meeting projections.
Jones told the committee that if the funds were put in the treasury to offset budget cuts, “it is very possible” that the state would have to repay the federal government.
Sen. Alice Harden, D-Jackson, asked about the restrictions on how the funds could be used.
Jones listed a number of prohibitions, including casinos, swimming pool construction, stadium construction and other things
“We’re not trying to do any of that,” Harden said, adding “I bet we won’t be building any casinos.”
Upchurch said the funds could be used “for budget needs.”
Jones also said the governor already has used some of the funds to offset budget cuts to the community colleges and to the prisons.
Sen. Haskell Montgomery, D-Bay Springs, said that it was “common sense” that if the funds could be used to offset cuts to the community colleges and prisons, they could be used to help other agencies.
But Nunnelee said it might violate federal law “to co-mingle” the funds by placing them in the treasury.
When pressed on the question several times, Jones said she did not know how much money was left in the fund. Nunnelee asked the governor’s staff to provide that information by today.
But Nunnelee said, “I am reluctant to pass legislation that might result in us having a $61 million bill to the federal government.”
Nunnelee already has passed through the Senate, at the governor’s request, legislation to provide Barbour the flexibility to cut agencies up to 10 percent as he chooses to deal with the slowdown in revenue collections.
On Tuesday, before adopting the proposal to use stimulus funds and rainy day funds to offset some of the cuts, the House rejected the Nunnelee-Barbour proposal.
Barbour also has said that unless the House passed his proposal, he would cut all agencies this week essentially 8 percent to deal with the shortfall.
State Superintendent Tom Burnham said Wednesday that school districts, which already have been cut 5 percent, will have to lay off personnel if they are cut more.
“The superintendents have cut all they can without cutting personnel,” Burnham said. “It is inescapable at this point.”
While Nunnelee said he had questions about using the stimulus funds, he said he still opposes taking additional money out of the rainy day fund.
For the current fiscal year, about $120 million has been taken out of the fund, leaving about $230 million. If an additional $50 million is taken out this year, he said, the fund might not hold enough to deal with future budget woes.
House Speaker Billy McCoy, D-Rienzi, also reiterated that the House has provided an option that limits cuts and leaves a cash reserve of about $400 million, including the rainy day fund.
He said the massive cuts being talked about by Barbour and the Senate leadership are unnecessary.
Nunnelee pledged to look at “available options” to deal with the budget crisis, but wanted to follow federal law and ensure a cash reserve for future years.